Then and now: the savings rates that will make you weep
And now the full extent of the ‘savings crisis’ has been unveiled thanks to the data crunchers at Moneyfacts.
They have analysed the top rates available five years ago and the top rates available today – and the stark differences make depressing reading.
According to Moneyfacts’ figures, the best easy access account five years ago was offered by Santander, paying 3.10%. Today, the most you can get is 1.00% from NS&I, RCI Bank and ICICI Bank UK. On £5,000, that’s a staggering £105 less interest earned over a one-year period.
Moneyfacts also found the best one-year fixed rate ISA in 2011 paid 3.25% from Metro Bank. Compare that to today’s best rate – 1.35% available from Al Rayan Bank – and that’s a difference in interest earned of £95.
The best one-year fixed rate bond five years ago was offered by the AA, paying 3.60%. Today, the highest rate available is 1.40%, that’s £110 less interest in your pocket.
And the best easy access ISA in 2011 was 3.05% from Newcastle Building Society, but today the best you can get is 1.10% from Coventry Building Society.
Rachel Springall, finance expert at Moneyfacts, said: “Consumers might have the best intentions to save, but the sad truth is that there is little incentive for them to put money aside due to the poor rates on offer. In the current low rate environment, there is more reason for customers to spend instead of save, which means they could be putting their savings goal at risk.”
But Springall said paltry rates are not the only reason putting people off saving.
“Some have little disposable income to put aside for the future, which in the event of a crisis might see them having to turn to credit, which could become costly,” she said.
The government has tried to offer a lifeline to struggling savers with the new 2.20% savings bond from NS&I, announced in the Autumn Statement and launching in the spring.
However, critics are underwhelmed by the proposition.
“The indicative rate of 2.2% is not enough to get long-suffering savers overly excited, especially when the maximum investment is £3,000. Over the three years, that would give a total return of just over £202 – not something to be sniffed at, but for many savers, not necessarily worth the time on the paperwork either,” said Susan Hannums, director of independent savings adviser Savingschampion.